Italy to Explore ‘Bilateral Ties’ for WTO Brexit over Fear of Losing Trade

OLIVIER MORIN/AFP/Getty12 Feb 2019

Italy’s populist, Eurosceptic government is examining potential bilateral arrangements with the UK in the event of a no-deal Brexit to safeguard against potential economic damage.

The UK is Italy’s third largest food products market, after Germany and the United States, accounting for €23 billion (£20bn/$26bn) annually — a bilateral surplus of €10 billion (£8.8bn/$11.3bn).

The country’s coalition government of the right-populist League and anti-establishment Five Star Movement (M5S) is worried that the European Commission’s inflexible attitude to Brexit will come at a cost of EU member state Italy, reportsThe Telegraph, with Prime Minister Giuseppe Conte telling his Brexit Task Force to examine the impact a no-deal will have on trade, ports, and customs.

“We want the closest possible bilateral ties with the UK and certainly don’t agree with any idea of punishment. You are our customer,” the League’s economics spokesman, Claudio Borghi, said.

“Unfortunately we are not in charge of Europe, at least not yet,” Mr Borghi added.

The Italians are also worried that under WTO, the UK would have access to a wider market for goods, including from North Africa, South Africa, and Central America for many of foods they traditionally buy from Italy within the EU’s Single Market.

“What worries us about Brexit is that exporters in the rest of the world will come in and undercut us. This is what happened after the Russia sanctions in 2014. The Turks grabbed our market share,” said Ettore Prandini, the head of Coldiretti, which is Italy’s agro-industrial federation.

For example, should the UK leave the EU without a deal, and trade on World Trade Organization (WTO) terms, Italy’s wine sales could fall by 33 per cent in the UK, according to estimates.

While Italy can prepare, as France has, for a WTO Brexit and explore bilateral arrangements, it cannot sign its own bilateral trade deals with the UK whilst still a member of the EU. Instead, Mr Prandini is set to meet with European Parliament president and fellow Italian Antonio Tajani to seek resolution with Brussels over the Brexit deadlock.

“Tajani promised to do his best but the matter was beyond his control. He told me ‘it’s [European Commission President Jean-Claude] Juncker who is in charge of everything’,” Mr Prandini said.

In June, Hungary warned that failure to come to a good trade arrangement with Brexit Britain would “devastate” the EU’s economy, and that Brussels should resist the urge to “punish” the UK for voting to leave the bloc.

“If we are not able to come to a deal with a country that represents 14 per cent – or one seventh – of our economy, that would lead to a situation that would be very devastating for the EU,” said Foreign Minister Péter Szijjártó.